The Department of Labor (DoL) Fiduciary Rule brings significant changes to the retirement industry. This new Rule, spelled out over more than 1,000 pages, requires financial advisers, qualified plan sponsors and other professionals that counsel and sell products and services to retirement clients, meet a fiduciary standard (in the client’s "best interest") and requires disclosure of fees and expenses associated with the retirement plan as well as underlying investment vehicles. The use of a "Best Interest Contract" is now required, establishing a fiduciary relationship with the retirement investor, reinforcing the provisions of the Rule.

The risk of litigation and regulatory enforcement for not adhering to the new fiduciary standards is quite real for financial firms and individual advisers. Safeguarding companies and advisers requires third party expertise and evidentiary defenses.

Being Able to Produce Evidence is the Key

Evidence that your company including your Financial Advisers fully comply with the requirements of the DoL Fiduciary Rule can be used as a shield in defense of class-action law suits alleging breach of the Best Interest Contract and fiduciary duties. Evidence can also be provided in case of regulatory investigation or enforcement of the Fiduciary Rule, by the Department of Labor.

This is Where Istonish Can Help

As a provider of objective, third party verification (TPV) capabilities for more than 15 years, Istonish can help reinforce written agreements by capturing "evidence of comprehension" from retail clients and provide solid contractual defense against regulatory investigations, class-action lawsuits and individual contractual disputes with retail consumers. We provide:

  • Secure legally admissible proof of compliance – or what we call "evidence of comprehension" – from retail consumers
  • Detailed insight into disposition to specific questions or disclosures
  • Get rended information across multiple investors or investment companies; ensure compliance throughout client companies
  • Improve sales confidence and operational efficiency
  • Build trust with retail customers
  • Spanish and English (other languages supported)
  • Secure, cloud-based storage for 10 years with on-demand retrieval via 
  • Multi- channel modes for verification – live agent, Interactive Voice Response (IVR), email, text

A second set of ears.

TPV can identify comprehension gaps or misunderstandings by a retail retirement investor, requiring that a financial adviser confirm terms, conditions and disclosures with the retail client, under the terms of the new Best Interest Contract. TPV feedback records, including statistics, can also be provided to the Advisers, sales supervisors and compliance – highlighting areas for improvement or Fiduciary Rule training.

Keep a record just in case.

Capturing, storing and retrieving "evidence of comprehension" can be difficult – even with the most advanced platforms. Using a third party to capture, index and store electronic artifacts such as customer voiceprints or digital records affirming understanding of the fiduciary's advice, with the ability to retrieve such evidence "on demand" is extremely valuable.

"Robo-advisors" are also at risk under the Fiduciary Rule.

With "robo-advisors," where investors make their own investment decisions, there is significant value in obtaining independent confirmation of the retail client's responsiblity for understanding their investment choices (investment risks, fees, costs, liquidity, etc.), and that they will not hold your organization responsible for their independent choices.

Run a tight ship.

Independent verification also enables organizations to administer business rules consistently across the enterprise. Reporting from a third party allows compliance professionals the ability to identify serious gaps in sales activities and customer interactions and correct them before there is a problem.

White Paper

Exploring some compliance requirements under the BICE, together with their counterparts in general ERISA principles and the concept of evidence of comprehension as an underlying factor impacting litigation decisions in a variety of contexts under ERISA, and a proposed solution to hedge against these types of significant legal risk.  

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